How to Transfer Profits Abroad from a Company in Turkey

Introduction

Foreign investors and international companies operating in Turkey often face a common question: how to transfer profits abroad from Turkey. Understanding the legal framework, banking requirements, tax obligations, and official documentation needed is crucial for a smooth and compliant profit repatriation process.

In this guide, we explore the legal structure that governs transfer profits  abroad from Turkey, including compliance with the Turkish Commercial Code, foreign exchange regulations, taxation, and practical tips for avoiding delays or penalties.

Whether you are planning a new company formation in Turkey or already own a Turkish entity, this article will help you navigate profit transfers legally and efficiently.

1. Legal Framework Governing Profit Transfers

1.1 Turkish Commercial Code and Foreign Exchange Law

Turkey has a liberal foreign exchange regime regulated by the Decree No. 32 Regarding the Protection of the Value of Turkish Currency and its related communiqués. These laws allow companies with foreign capital to freely transfer their net profits abroad, after taxes and legal reserves have been settled.

Foreign investors are also protected under the Foreign Direct Investment Law (FDI Law No. 4875), which guarantees that foreign capital is treated equally to domestic capital.

You can consult the official Ministry of Trade website for regulations related to foreign investment here:
? https://www.trade.gov.tr

2. Requirements for Transferring Profits Abroad

To transfer profits abroad from Turkey, the following steps must generally be completed:

2.1 Legal and Financial Requirements

• Annual General Assembly Meeting must approve the distribution of profits.
• The company’s financial statements must be audited and approved.
• All taxation in Turkey liabilities must be fulfilled.
• Legal reserves (usually 5% of annual profit until reaching 20% of paid-in capital) must be allocated.
• Dividends must be calculated and declared.

2.2 Bank Procedures

Authorized banks in Turkey are responsible for executing profit transfers. They require:

• The General Assembly Resolution
• Tax office documentation showing no outstanding liabilities
• The approved financial statements
• SWIFT transfer details

3. Taxation Considerations

Taxation in Turkey plays a central role in profit repatriation. Companies must account for the following:

3.1 Corporate Income Tax

The corporate tax rate in Turkey is currently 25% (subject to annual changes). After-tax profits are available for distribution.

3.2 Dividend Withholding Tax

A withholding tax of 10% applies when profits are distributed to non-resident shareholders (subject to applicable Double Taxation Treaties).

For example, under Turkey’s DTT with Germany, the withholding tax may be reduced to 5%.

You can check the tax treaties and updates on the official Ministry of Finance site here:
? https://www.hmb.gov.tr

3.3 VAT and Stamp Tax

These are generally not directly applicable to dividend distribution, but companies must ensure their other taxation in Turkey liabilities are cleared.

4. Documentation and Regulatory Filings

Proper documentation ensures a smooth transfer. The essential documents include:

• Tax Clearance Certificate
• General Assembly Decision
• Shareholders’ Register
• SWIFT details
• Signed instructions to the bank

Working with a bilingual English Speaking Lawyer in Turkey can significantly ease the paperwork process, especially when dealing with official Turkish documents and liaising with tax offices and banks.

5. Role of Notaries and Translation

5.1 Notaries in Turkey

Legal documents such as the General Assembly Meeting minutes must be notarized. Notaries in Turkey also certify translations and verify identity documents when necessary.

5.2 Translation Services in Turkey

If the shareholder is a foreign national or company, certain documents (such as passports or company resolutions) must be translated into Turkish by certified translation services in Turkey and notarized. This is essential to meet the requirements of Turkish authorities and banks.

6. Using Power of Attorney

If the foreign shareholder cannot be present in Turkey, they can authorize a representative through a power of attorney in Turkey. This POA must be notarized and, if issued abroad, apostilled or legalized depending on the country of origin.

The representative can handle profit distribution, banking processes, and documentation filing on the shareholder’s behalf.

7. Government Reporting Requirements

The Central Bank of the Republic of Turkey (CBRT) and the Ministry of Treasury and Finance monitor capital movements for compliance and data collection.

Companies must report:

• Annual foreign direct investment data
• Profit transfers through the EFT system

This reporting is done via the official e-government platform. You can check guidance here:
? https://www.turkiye.gov.tr/

8. Practical Tips and Common Pitfalls

Here are practical tips to ensure smooth profit transfers abroad from Turkey:

✅ Tips

• Always plan for profit transfers during the company’s General Assembly cycle.
• Get tax clearance before initiating bank transfers.
• Use a bank familiar with international business clients.
• Work with legal and financial professionals fluent in Turkish and English.

❌ Common Pitfalls

• Failing to reserve legal retained earnings
• Forgetting to clear all taxation in Turkey obligations
• Incomplete or mistranslated documents
• Using banks unfamiliar with international profit repatriation

9. Alternative Routes for Profit Transfers

If direct dividend distribution is not desired or possible due to timing or legal limitations, other mechanisms include:

• Management Service Fees: Charging the parent company for services rendered
• Royalties and IP Transfers: Licensing intellectual property
• Intercompany Loans: Structured as debt repayment instead of equity return

Each method has tax and legal implications. Consult professionals before proceeding.

10. What If You Are Just Starting?

If you’re only now opening a company in Turkey, it’s crucial to structure your company properly for future profit repatriation. Key considerations include:

• Choosing a tax-efficient ownership structure
• Understanding Turkish GAAP and audit requirements
• Planning dividend policies early

Whether you’re just considering company formation in Turkey or are already operational, being proactive is key.

Conclusion

Transferring profits abroad from a Turkish company is fully legal and feasible—as long as you comply with Turkish tax law, corporate procedures, and banking regulations. With the right legal and financial partners, and a clear understanding of the required steps, you can efficiently and legally move profits to your home country.

Utilize the support of an English Speaking Lawyer in Turkey and work with reliable translation services in Turkey and notaries in Turkey to avoid delays. Understanding the rules around power of attorney in Turkey will also streamline operations if you’re based abroad.

Start on the right foot by ensuring proper company formation in Turkey and align your operations with Turkish commercial law, especially regarding taxation in Turkey.